Where Game Companies Stand On NFTs
Despite consistent backlash in response to NFT announcements, plenty of gaming companies still want their own apes.
If the recent spate of NFT-related announcements quickly followed by NFT-related apologies are any indication, video game publishers (not to mention voice actors) are going to have a hard time convincing their target audience to accept "play-to-earn" mechanics. But that doesn't mean game industry execs aren't eager to hop on the bandwagon, even in light of environmental concerns. In fact, despite the backlash that basically every NFT announcement has received, some publishers still appear eager to incorporate NFTs into their games.
With game companies expressing a range of thoughts on the future of NFTs in the games industry--from Ubisoft's early adopter enthusiasm to Microsoft's cautious skepticism--we've rounded up the public statements from major game publishers and developers on the topic. If you're just curious about what NFTs are, this video is a great place to start.
So far, Ubisoft is the only major publisher to actually incorporate NFTs into one of its games, adding Digits, in-game cosmetic items with unique serial numbers, to its 2019 live-service shooter Tom Clancy's Ghost Recon Breakpoint. In December, the French publisher started its Ubisoft Quartz initiative, which it says is "for players, and players only." That means that only buyers who also own Ghost Recon Breakpoint can earn, buy, and resell Digits at Rarible.com or Objkt.com, Ubisoft's two officially approved resellers. The full list of requirements stipulates that players play the game on Ubisoft Connect on PC, reach XP level 5, have activated 2-factor authentication with Ubisoft Connect, be at least 18 years old, and be located in and a resident of one of the eligible territories. As a result, very few people have engaged with Ubisoft's NFTs at all, with a total volume of less than $1000 (256.49 Tezos) in sales on Objkt.com, for example, as of February 4.
Despite the low sales and overwhelmingly negative fan response, Ubisoft has doubled down on NFTs. CEO Yves Guillemot reiterated his commitment to implementing the technology in December, and in late January, Nicolas Pouard, vice president at Ubisoft's Strategic Innovations Lab, and Didier Genevois, the company's blockchain technical director, discussed the fan response in an interview with Finder. Pouard faulted players for failing to understand the appeal of NFTs.
"Well, it was a reaction we were expecting. We know it's not an easy concept to grasp," Pouard said. "But Quartz is really just a first step that should lead to something bigger. Something that will be more easily understood by our players. That's the way we think about it and why we will keep experimenting. We will keep releasing features and services around this first initiative. And our belief is that, piece by piece, the puzzle will be revealed and understood by our players. We hope they will better understand the value we offer them."
As it stands, Ubisoft is inarguably the industry's biggest booster of NFTs. While other companies have stated their plans to become involved, expressed interest, or reneged after a backlash, Ubisoft has created and sold NFTs and, despite outcry, remains committed to continuing to sell NFTs.
On February 3, GameStop announced plans to partner with Immutable, an Australian cryptocurrency company, to create a $100 million fund in Immutable's IMX tokens intended to fund grants for creators of NFT content and technology. The two entities are also planning to launch their own crypto marketplace later this year. Upon achieving certain milestones, the terms of the deal dictate that Immutable will give GameStop as much as $150 million in IMX tokens. Overall, this seems like a big bet on the blockchain from a brick-and-mortar retailer that has struggled to keep up with an increasingly digital marketplace.
In "A New Year's Letter from the President" posted to Square Enix's website on January 1, president and representative director Yosuke Matsuda expressed an eagerness to incorporate blockchain and/or NFT technology into future releases but stopped short of detailing specific plans. In the wide-ranging letter, Matsuda expressed cautious excitement about the future of NFTs, writing:
I see 2021 not only as "Metaverse: Year One," but also as "NFTs: Year One" given that it was a year in which NFTs were met with a great deal of enthusiasm by a rapidly expanding user base. However, we do observe examples here and there of overheated trading in NFT-based digital goods with somewhat speculative overtones, regardless of the observed value of the content provided. This, obviously, is not an ideal situation, but I expect to see an eventual right-sizing in digital goods deals as they become more commonplace among the general public, with the value of each available content corrected to their true estimated worth, and I look for them to become as familiar as dealings in physical goods.
Matsuda seemed to enthusiastically embrace the idea of incorporating "play-to-earn" mechanics into future Square Enix games.
I realize that some people who "play to have fun" and who currently form the majority of players have voiced their reservations toward these new trends, and understandably so. However, I believe that there will be a certain number of people whose motivation is to "play to contribute," by which I mean to help make the game more exciting. Traditional gaming has offered no explicit incentive to this latter group of people, who were motivated strictly by such inconsistent personal feelings as goodwill and volunteer spirit.
Alongside the environmental impacts associated with cryptocurrency, the incorporation of play-to-earn mechanics is one of the chief reasons players object to NFTs. Rather than playing games because they have artistic merit, provide an opportunity to connect with friends, offer an escape from daily stresses, or, you know, are fun, play-to-earn mechanics have the potential to increasingly transform playing games into something to monetize. Instead of a hobby, gaming could become a job or, at least, a side hustle. Given the games industry's embrace of loot boxes and in-game real money marketplaces, many players are wary of publishers adding more methods with which they can extract money from their customers.
On February 3, Nintendo expressed interest in NFTs and the Metaverse during a Q&A session after the publication of recent financial results. The company said, per analyst David Gibson, "We do have interest in this area, we feel the potential in this area, but we wonder what joy we can provide in this area and this is difficult to define right now."
Q) How think about metaverse and NFT?— David Gibson (@gibbogame) February 3, 2022
A) We do have interest in this area, we feel the potential in this area, but we wonder what joy we can provide in this area and this is difficult to define right now (hey Facebook etc take note!!) 8/
Gibson later clarified that Nintendo was primarily discussing its stance toward the metaverse.
On an earnings call last November, Electronic Arts CEO Andrew Wilson called NFTs the "future of the industry." But, more recently, Wilson stated that the publisher was not "driving hard" on implementing the blockchain into future games. That slight pivot may be a reaction, on Wilson's part, to the negative reaction with which NFT announcements have been met.
Xbox boss Phil Spencer hasn't ruled out offering NFTs in the future, but in an interview with Axios, he expressed skepticism about the technology in its current state.
"What I'd say today on NFT, all up, is I think there's a lot of speculation and experimentation that's happening, and that some of the creative that I see today feels more exploitive than about entertainment," Spencer said.
"I don't think it necessitates that every NFT game is exploitive. I just think we're kind of in that journey of people figuring it out…. And I can understand that, early on, you see a lot of things that probably are not things you want to have in your store…. I think anything that we looked at in our storefront that we said is exploitive would be something that we would, you know, take action on. We don't want that kind of content."
Outside of re-releases, Konami doesn't publish as many games as it used to, but the house that Castlevania built celebrated the 35th anniversary of its beloved vampire-slaying series in a way guaranteed to make at least a portion of the audience unhappy. In January, the Japanese publisher marked the landmark occasion by selling NFTs of Castlevania-related pixel art, videos, and music on OpenSea, an NFT auction site.
On January 31, indie publisher Team17--best known as the developer of the Worms series, and the publisher of Overcooked--announced it would partner with Reality Gaming Group on a "generative NFT art project" called MetaWorms. The website featured a 3D image of a glittery worm holding a Holy Hand Grenade. The NFTs were not planned for inclusion in future Worms games and would have been sold separately, unlike Ubisoft's Digits, which were implemented into, and required users to own, Ghost Recon Breakpoint.
Team17's announcement was met with an intensely negative response, both from fans and from developers who have worked with the publisher in the past.
Aggro Crab, an indie developer that partnered with Team17 on its 2020 roguelike Going Under, released a strongly worded statement condemning Team17's decision.
"Needless to say, we will not be working with them on further titles," the statement said, "and encourage other indie developers to do the same unless this decision is reversed."
Overcooked developer Ghost Town Games tweeted something similar (albeit less aggro) to its official Twitter account.
"We at Ghost Town Games just wanted to reassure you all that Overcooked (and any of our future games) will never engage with NFTs," read the statement. "We don't support NFTs. We think they carry too great an environmental and social cost."
Similarly, Playtonic, developer of the Yooka-Laylee games, both of which were published by Team17, dismissed the prospect of using NFTs at any time.
"We have no interest in utilising NFT's in any aspect of our business now or in the future," Playtonic said. "Nor do we endorse the use of NFT's [sic] in the wider world."
The Game Kitchen, which partnered with Team17 on its game Blasphemous, put out a similar statement, which read, "In light of recent announcements, we consider it necessary to state that The Game Kitchen does not support or endorse NFTs, so we will never be utilising them in our games [sic]."
All four developers encouraged their fans to be kind to Team17 community managers, who are often on the receiving end of harassment for decisions made above their heads.
SMG Studio, which worked with Team17 on Moving Out, put out a similar statement, but went further, stating: "P.S. During the pandemic we have had time to reconsider our impact as a studio on the environment. In a conscientious effort to reduce landfill we won't be doing any future merchandise, any physical editions of SMG's own IP games and if attending events, a reduced booth presence. No more 'stuff' that's gonna end up in the bin the next day. No one needs an SMG Tshirt. We'll also be carbon offsetting the company's footprint to the best of our ability from 2022 onwards."
Team17 walked the decision back on February 1, less than 24 hours after its initial announcement. In a statement on the official company Twitter, Team17 said, "Team17 is today announcing an end to the MetaWorms NFT project. We have listened to our Teamsters, development partners, and our games’ communities, and the concerns they’ve expressed, and have therefore taken the decision to step back from the NFT space."
GSC Game World
On December 15, Stalker 2: Heart of Chernobyl developer/publisher GSC Game World announced that its eagerly anticipated post-apocalyptic shooter would incorporate NFTs. GSC Game World's plan was to auction of the right to become a "metahuman," meaning the opportunity to go to GSC Game World's offices for a "detailed scanning procedure." Then a highly detailed NPC based on the owner's likeness would be put into the game. GSC Game World quickly canceled the plans, tweeting on December 17: "Dear Stalkers, we hear you. Based on the feedback we received, we've made a decision to cancel anything NFT-related in S.T.A.L.K.E.R. 2. The interests of our fans and players are the top priority for the team. We're making this game for you to enjoy–whatever the cost is. If you care, we care too."
While Sony has not attempted to incorporate NFTs into any of its games, other divisions of the company have already rolled out NFTs. The Japanese company partnered with AMC to offer NFTs to fans who preordered tickets for Spider-Man: No Way Home. Meanwhile, Sony Music teamed up with Pinkfong to mint a line of "Baby Shark"-themed NFTs. Still, there's no indication that Sony plans to incorporate NFTs into its video games.
One of the earliest examples of a major developer getting involved with NFTs, Dead by Daylight developer Behaviour Interactive worked with a company called Boss Protocol last October to create tie-in NFTs featuring the game's model of Hellraiser's Pinhead. As Behaviour put it in a tweet at the time: "Behaviour worked with Boss Protocol over several months to adapt in-game models for use as NFTs and approved them prior to the release of Pinhead in DbD. The NFTs have a chance to grant access to the #Hellraiser chapter of DbD." No content was locked behind the NFTs, but fan reaction was still overwhelmingly negative.
Strauss Zelnick, CEO of Take-Two, the parent company of Grand Theft Auto V and Red Dead Redemption 2 publisher Rockstar Games, is a big fan of NFTs. That's perhaps unsurprising given GTA Online's business model, which is heavily dependent on microtransactions.
"If you believe in collectible physical goods, I don't know why you wouldn't believe in collectible digital goods. And blockchain authorization, which is what an NFT really is, is one way--not the only way--to authenticate the fact something is singular, is rare," Zelnick told GamesIndustry.biz.
"So I'm a big believer, but what I don't believe is that just because something is digital or an NFT that it suddenly has value and/or has value that will be increased in the future. And I think that's the problem. NFTs, because they're related to the blockchain as currently contemplated and because some have gone for a lot of money, are seen by some as just another opportunity to invest in a speculation that some think will only go up. And speculations don't just go up; they come down to... For an NFT to be valuable and durable, it has to be found at the intersection of rarity and quality, of rarity and value. And there's rarity for sure in all NFTs, but I'm not sure there's value."
Zelnick may be a big fan, but he hasn't indicated that Take-Two will incorporate NFTs into future games.
Peter Molyneux, known for his work on games like Fable and Black and White, announced in December that his company 22cans is partnering with Gala Games, which claims on its website to make "blockchain games you'll actually want to play," on an NFT game called Legacy. Molyneux previously announced the game in 2019 but has reworked it to take advantage of blockchain technology. It's the only game we've seen so far from a major developer that actually requires players to purchase NFTs in order to play.
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